Tips for Filing Taxes on Time

The tax season is approaching once again. As we get closer to April, many people will be dreading about sorting out their income and tax return. Whether you owe taxes or expect a rebate, your stress level will probably run high during this time of the year.

Research shows that stressing about taxes can affect everyday activities such as interaction with other people and job performance. The day you file your tax return is a huge relief, and you will feel like a great weight has been lifted off your shoulders.

It is always better to file your tax return sooner rather than later. Waiting until the last moment is very likely to make you miss the deadline. It will also help relieve stress and let you focus on more important things in life.

Here are our top tips to help you file tax returns on time.

Review Your Paycheck for Accuracy

Most people in Canada and the U.S. generate their income through salary. The tax regulations concerning salary taxes change all the time. Your employer may not be using the most recent tax rate to deduct your taxes. This could mean you are either overpaying or underpaying your taxes.

Both of these situations are bad.  If your employer has deducted lower taxes than you are supposed to pay, then you will definitely need to calculate the correct tax and deposit it with your file return. Failure to do so will put you in trouble with the tax authorities.

On the other hand, if your employer has been overtaxing your salary, you will definitely want to file a tax return to claim back overpaid taxes.

Work With a Tax Consultant

Although you can prepare and file taxes on your own, it is ideal to use an experienced and knowledgeable tax professional who can do it for you.

Tax consultants are professionals who are aware of changes in regulations. They can guide you better on how to use your marital and residential status to claim tax allowances and deductibles. They will also tell you which bills to keep in hand and make the process of getting a refund smooth and easy. Above all, they will ensure that you get the taxes filed on time and avoid last-minute headaches.

In many cases, tax consultants will save you enough money that will more than cover the cost of hiring them.

Keep All Bills and Invoices on Hand

If you are self-employed or run a business, you will need to file taxes on your income. Make sure that you maintain a complete accounting record of your transactions and keep all invoices on hand. 

You will need to submit proper and complete accounts for business expenses in order to avail them as deductibles.  Your reported income will also need to be accurate. Underreporting business income, deliberately or due to neglect, can put into a lot of trouble with the authorities. 

Keep the originals in one place and make hard and soft copies of the documents to access them more easily when you need them during tax calculation.

Find and Avail Smart Ways to Get Tax Deductibles

Making contributions to your retirement fund, spending on qualified medical expenses, and donating to approved charities are allowed as deductible expenses from your tax liability. Make sure that you use them smartly throughout the year to keep your taxes down. 

You will need to have the appropriate records on hand, like medical bills and expenses as well as investment confirmations and receipts to claim these deductibles.

Submit Accurate Tax Return

It is highly recommended to cross-check and double-check your tax return documents before submitting them to the tax authorities. While mistakes are possible and the tax department will be sympathetic to oversight or omissions, they may not be too kind if it appears that you deliberately tried to mislead them on income and expenses.

One way to ensure accuracy is to work with an experienced accountant or tax consultant who can audit the accounts for you. They are very likely to catch missing information or errors in the record and will help you correct it before submitting the return.

Once you have submitted your tax returns, it is very unlikely that you will go back to it for review unless the tax department calls for it. It is far better for you to catch mistakes with your records before the ball is out of your court.

Know the Important Dates

Tax authorities typically begin starting to accept returns mid-March, and the deadline ends in April. At the time of this writing the Canadian deadline has been extended to June 1, 2020, due to COVID-19.

If you are a salaried individual, you will need a wage and tax assessment from your employer with details of the taxes that were deducted from your salary and paid on your behalf.

Most businesses file their employee tax documents in January, the last day of February at the latest, so you should be able to receive the relevant documents from your employer by the end of February, mid-March at the latest. If you receive the documents sooner, then begin preparing your tax returns immediately.

Understand Your Status and Important Salary Issues

There are three things that determine status and affect your tax rate. Source of income can put you in a salaried or business/self-employed status, both having different tax rates. Your age and health will also affect your tax rate. Older people or those with disabilities are charged lower tax rates. Finally, your marital status can also affect your tax rate as married couples get more tax incentives.

If your main source of income (more than 50%) comes through salary, then you are considered a salaried individual. You will fall into one of the tax brackets, depending on how much income you earn as an individual or married couple. The tax rates from the lowest to the highest brackets go from 10% – 37%.

Every individual has a personal allowance limit. If your income for a tax year is lower than your personal tax allowance, then you are not charged any income tax. The minimum income you need to earn to pay taxes as a single individual is $12,069. Married couples living together have a higher minimum salary to pay income taxes.

Summary

The tax season can be a source of anxiety and headache for people, but it doesn’t need to be. You can work with a qualified and experienced tax consultancy that will help you gather relevant documents for submission and make the process of filing tax returns a breeze.

Need help with filing tax returns on time? Get in touch with our experts to make everything easy! Download our convenient  Tax Organizer found on our Tax Preparation Services page.